Financial Fitness - What You Earn

By: David Smyth, October 25, 2019

Over the next three weeks, we're going to be talking about financial fitness and the three primary areas that comprise your financial health - what you earn, what you spend, and what you save. It's important to take a close look and consider each of these financial buckets at least once a year to ensure you're on the best financial footing for your life.

Those of you who work with us know that we ask a lot of questions that may seem random at first, but they all revolve around those three factors - what you earn, spend and save. These next few newsletters will serve as a primer for anyone who hasn't been into our office yet, or as a reminder for those of you who do work with us.

Today, let's talk about what you earn. Maybe you're Dwight Schrute and you work in sales at the Dunder Mifflin Paper Company. Your income is a base salary of $60,000 plus about $40,000 in commissions.

Others of you might be more like Joan Holloway at Sterling Cooper and you're a strictly W2 employee. Or maybe you're self-employed and you don't necessarily make $100,000, a year but your job isn't bad and you dictate when you work and when you don't.

We're all compensated in different ways, and we all earn money in different ways. Regardless, I do notice that some people stop evaluating what they're earning as soon as they get that paycheck, while others think, "Hey, I could get a side gig and earn some extra cash!"

When we talk to the folks who do have a side hustle and ask them how they use that money, we often hear that they live off their primary paycheck and use that extra cash for some combination of fun, caring for family members, or helping others. One client told us she uses her side money to buy shoes and boots for the homeless. (Cool huh?)

When we evaluate what people are earning, we learn that people are wired differently. Some people budget methodically off of that predictable, twice-a-month W2 paycheck, while others literally eat what they kill. For this group, they can ask themselves how hard they want to work this year, and then estimate how many hours that work will take, and then work as efficiently as possible. It's different for everyone, and that's okay - as long as your goals and your income are in alignment.

I challenge you as you're taking a look at your financial fitness to ask yourself: How do I earn money currently? Is that amount reasonable compensation for the services I provide? If yes, great. If not, then I challenge you to ask yourself what you can do to change things. Can you ask for a raise? Can you look for a new job? Can you start a side gig to create more income so your earnings column is where you need it to be? Trust me, I talk to people all the time in our conference room who, when asked about what they earn and their financial goals, well, they're simply not earning enough.

To be clear, there's nothing wrong with a profession or lifestyle where you don't earn a lot. But that has to fit your goals. Financial stress happens when people aren't earning enough to match their lifestyle and long-term financial goals. So, what are the answers? If this describes you and you're feeling that stress, what do you need to consider?

I'll tell you my story. In college, I needed money, and the $2.75 per-hour minimum wage from the school cafeteria wasn't going to cut it. So, I got a job as the night store clerk at the Shell station in Wilmore, Kentucky, where I worked after classes. (If you want some crazy stories, ask me about that job sometime!) I was also still cleaning the grease traps in the cafeteria kitchen, and busing and cleaning dishes. Of course, working at the convenience store came with the perk of free black coffee and unsold food.

But, it still wasn't enough. I got a job listening to a guy read the Old Testament. Seriously. All those "begats" paid $12 an hour! That was NFL-level money to me at the time - all because of the Bible. After a few months of that, I needed something else. My brain started turning, and I decided to order a pizza while I thought I over. Well, the delivery guy was a classmate who told me he was bringing in $14-$15 an hour, so I said, sign me up! (Again, ask me about this job if you ever want some stories...) Basically, I delivered pizzas for the next two or three years and put myself through school - my goals and income (at the time) were finally lined up.

Now, I'm not telling you to go out and deliver pizzas. But in my mind, it's like driving Uber to bring in a little extra money. I am hoping to challenge you to use that brain that sits between your ears to ask yourself if you're earning enough. If not, what can you do to get there? Could you continue your education? Could you retool your job skills? Could you talk to your boss about enacting a plan for a raise and promotion? Of course it's up to you, but I hope I've planted the seed and that you'll spend the next 15 minutes thinking about what your goals are, and whether your earnings are in line with those goals. And, next time you're in our office, we'd love to hear your thoughts.